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Burma: Gem Trade Bolsters Military Regime, Fuels Atrocities

Importing Countries Should Ban Burmese Rubies and Jade

(New York) - China, Thailand, the United States, and other countries should completely block the purchase of gems from Burma that help finance military abuses there, Human Rights Watch said today. The group issued its call for targeted sanctions on Burma’s gem business ahead of the opening of a major gem auction in Rangoon this week.

“Burma’s rubies and jade are prized for their beauty but the ugly truth is that the trade in these stones supports human rights abuses,” said Arvind Ganesan, director of the Business and Human Rights Program at Human Rights Watch. “The sale of these gems gives Burma’s military rulers quick cash to stay in power.”

Burma’s military junta has organized the auction, which is scheduled to run from November 14 to 26 at the Myanmar Convention Center. Large numbers of precious and semi-precious stones will be on offer to the highest bidder.

Burma produces a variety of gems but is most famous for its rubies and jade. More than 90 percent of the world’s rubies originate in Burma, according to industry estimates. Burmese rubies are renowned for their dark “pigeon’s blood” color. Burma also dominates as the top producer of jadeite, a type of jade that is valued highly for its deep green hue.

The state-run Myanmar Gems Enterprise said it generated sales of nearly US$300 million in fiscal year 2006-2007. This figure represented an increase of nearly 45 percent over the previous year’s gem earnings. It qualified the company as the country’s third-highest exporter by value, after the state-run petroleum and timber companies, Myanmar Oil and Gas Enterprise, and the Myanmar Timber Enterprise.

Burmese officials have openly stated in the past that they increasingly rely on gem auctions to bring in hard currency. Regular auctions used to be held annually, but since 1992 they have taken place twice yearly. Beginning in 2004, additional “special” auctions were called to help fill the government’s coffers.

The junta controls most mining activity in the country. It has a direct ownership interest in many mines, in some cases through joint ventures with private entrepreneurs. Senior military officers reputedly arrange “private” sales of the finest gems and keep the proceeds.

Official gem sales at auction and private sales of the most valuable gems account for the major portion of Burma’s gem trade. In addition, some cross-border smuggling of gems takes place.

Burma’s gem mines are ruled with an iron hand by military authorities and mining companies. Conditions are reported to be deplorable. Access to the mining tracks is strictly limited, especially to foreigners, but reports from nongovernmental groups suggest that land confiscation, extortion, forced labor, child labor, environmental pollution, and unsafe working conditions for miners are rampant. The absence of health care and HIV prevention information and services has accelerated the spread of HIV/AIDS and drug resistant malaria and tuberculosis in mining areas.

“It is simply unconscionable for traders to help Burma’s generals sell off the country’s natural resources for their own benefit while average people are victimized and harassed,” said Ganesan. “Trading in Burmese gems bolsters the country’s military rulers at a time when they are committing serious human rights abuses, driving their people into further poverty, and rejecting calls for political reconciliation.”

The upcoming gem auction is the first in Burma since the military government violently repressed peaceful protests that began in August. It was twice postponed, purportedly due to weather conditions. Ongoing unrest and strong international condemnation of the regime may have raised fears that few traders would attend. Even after delaying the event, the government has set lower expectations for attendance than in the past.

Myanmar Gems Enterprise has said it expects approximately 2,000 foreign buyers to attend the November auction, which would be significantly fewer than attended prior auctions in March and July 2007. The March gem emporium, attended by some 3,000 traders, reportedly generated $185 million in total sales. The company said the July auction, at which 4,000 buyers were present, set a new record for jade earnings but it has not released sales figures.

The vast majority of the gem merchants who attend the Rangoon auctions are from Asian countries, especially China and Thailand. Those two countries also import the bulk of Burma’s precious stones. Burmese jade, which is popular in China, reportedly is increasingly sought after for use in products commemorating the 2008 Beijing Olympics.

Chinese buyers also purchased Burmese gems at a recent China-ASEAN Expo that took place from October 28-31 in Nanning, in southern China. According to a report in the Myanmar Times, Burma’s gem sales at the four-day event amounted to 200,000 yuan (US$27,000) per day.

Thailand is the main importer of Burmese colored gemstones, which are cut, polished, and re-exported to customers in third countries. Burmese gems typically are sold on to retailers in Europe, Japan, and the United States. India also serves as a cutting and polishing center. A considerable number of the highest-quality and most expensive stones are exported to Switzerland for onward sale to the US or other markets, according to industry sources.

On October 15, the European Union imposed new sanctions to block the import of Burmese precious and semi precious stones, along with other measures.

In the US Congress, pending legislation would ban the purchase of Burmese-mined gemstones, closing a loophole in existing US sanctions that allows gems from Burma to be sold in the US if they have been processed in a third country.

A few jewelry retailers, notably Tiffany & Co. and Leber Jewelers, have long refused to purchase gems of Burmese origin. In reaction to the bloody crackdown in Burma that began in August, several European and US jewelry companies – including Bulgari and Cartier – also have voluntarily pledged to boycott Burmese gems.

In October 2007 the Jewelers of America, an industry association, issued an unprecedented call on Congress to fully ban Burmese gems and encouraged its 11,000 members to halt purchases of these gems until democratic reforms are underway. Other industry associations – one in Canada, a second association in the US, and an international jewelers confederation – also have supported similar moves.

“The governments and companies that have stopped buying Burmese gems deserve credit for not supporting human rights abusers,” said Ganesan. “The rest have the blood of Burmese on their hands.”

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